FHA Reverse Mortgage
By Akikta C
If you’re here reading this page you are wondering exactly what is a FHA Reverse Mortgage and is it right for you; both excellent questions.
First let’s start by saying that reverse mortgages are definitely not for everyone, in fact, if you are not a senior citizen with substantial equity in your home, you should probably navigate away from this page now, unless you are a sibling or loved one of a senior citizen seeking a reverse mortgage.
What Is It?
When you first bought your home you secured a loan from a lender for that homes value at the time you bought it, and you made monthly payments to that lender for a set amount of years, and through the years you built up equity in that home as a result of those payments.
Simply put a FHA Reverse Mortgage is just the opposite of that type of loan or the reverse of it, instead of you making payments a reverse mortgage makes payments to you from your built up equity in your home as long as you continue to live in your home.
The Basics
* OK you own your home, and its either payed off, or just about payed off, and for whatever reason, you would like to use some of your homes assets, but would rather not have to sell it to gain access to those assets.
* A lender would then provide you money structured around the current value of your home, the current interest rates, and your current age. And then loan you a percentage of what you would be getting had you sold your home.
* You can still stay in your home, and you still own your home, and you now have the cash to do whatever your heart desires, now that’s the best of both worlds.
* When you move out of the home, or god forbid you pass on, that is when you will have to pay back the loan with acquired interest.
* No matter how much debt you have accrued you never owe more than what your home is worth.
* If you sell your home any equity left after the sale goes into your pocket.
Deferred Payment
FHA Reverse Mortgages are often called deferred payment loans, for the simple reason that your not paying off the loan, as you use your equity, instead payments are placed on hold.
This is why this type of loan is targeted for senior citizens who live off their savings, or a fixed income, it can help to free up some much needed cash to add to their current lifestyle.
Bottom line is you are reaping the benefits off the equity in your home versus building up equity in your home, as you would with a traditional loan.
Do I Qualify?
If you are at least 62 years of age or older than you have a good probability of qualifying.
* No Income Requirements
* No Credit Checks
In fact the older the better, as far as some lenders are concerned such as HUD, Financial Freedom, and Fannie Mae for the simple reason of odds.
The older you are the better chance they won’t have to service your loan for these reasons…
* You may have to move out of your home for assisted living
* You may pass on
* In other words the older you are the shorter the life span of the loan, which make for a better chance of you qualifying.
Summary
Reverse Mortgages of old were not a very good idea, because they did not favor the interests of the borrower and usually ended up with horror stories for the consumer.
However Reverse Mortgages of today are more powerful, secure, and undoubtedly favor the best interests of the borrower.
Reverse Mortgages can be used for a boat load of things, and can help many seniors out of many sticky situations. Always keep in mind nothing is for free, they still have to be paid back eventually, either when you move, or on your death.
Akikta has been doing research and article publishing on areas of personal interest for several years, on such topics as Finance, Health & Fitness, Real Estate, and Home & Garden Projects. You are welcome to visit his latest project over at http://www.refinancingfhaloan.org which helps people find quality information on FHA Mortgages.
Photo by Darin Barry
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